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Electric Company Cars Update

For many years, due to the significant tax charges imposed,  it has generally not been worthwhile for employees to have  company cars.

The tax regime for company vans is however much more favourable.  Following the Coke Cola tax case in July 2020, vans with 2 rows of seats are now treated for tax purposes (other than for VAT) as cars. Although double cab pick ups, such as the Nissan Navarra are still treated as vans.

The tax regime for electric cars is now much more favourable, as the government seeks to encourage the use of such vehicles. For tax year 2021/22 the benefit in kind on electric cars is 1% of the vehicles list price. The same benefit in kind charge is applied to hybrid vehicles having emissions of up to 50g CO2 and an electric range of at least 130 miles.

Tax payers suffer income tax at their tax rate on the benefit, so a  basic rate tax payer would pay income tax at 20%. The employer also pays National Insurance Contributions at 13.8% of the benefit in kind.

Capital allowance of 100% are available at 100% f the vehicle cost for 100% electric vehicles.

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